Reuters: US Dollar Report: EMERGING MARKETS-Brazil rate futures signal more monetary easing

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EMERGING MARKETS-Brazil rate futures signal more monetary easing Oct 2nd 2012, 17:15 Tweet Share this Email Print Tue Oct 2, 2012 1:15pm EDT * Brazil industry grows less than expected in August * Latam currencies flat on Spain bailout uncertainty By Danielle Fonseca RIO DE JANEIRO, Oct 2 (Reuters) - Brazil's interest-rate futures dropped on Tuesday after data showed industrial output grew less than expected in August, adding to bets of additional monetary easing next week. Meanwhile, Latin American currencies were little changed as investors awaited news on an expected international bailout for Spain, a step investors consider crucial to contain the spreading of the euro-zone debt crisis. Brazil's interest-rate contracts maturing in January 2013 , the most traded at the BM&FBovespa exchange, fell 2 basis points to 7.223 percent after data showed industrial output grew 1.5 percent in August, the fastest pace in 15 months but less than the 2 percent forecast by economists. "Industrial production came in below market expectations and that added to bets of another interest rate cut of 0.25 percentage point," said Decio Pereira Filho, a trader with Socopa brokerage in Sao Paulo. Brazil's central bank holds a monetary policy meeting next week and the domestic yield curve shows a slight majority of investors are betting the base Selic rate will be cut again from its current all-time low of 7.5 percent. However, many investors still bet the Selic will remain at its current level, which could make it easier for the central bank to delay a possible hike in the rate next year, when the economy is expected to pick up. CURRENCIES FLAT Most Latin American currencies were little changed, however, as bets on an imminent Spanish bailout were pared back after Prime Minister Mariano Rajoy was quoted as saying the government would not seek financial help this weekend. European officials told Reuters late on Monday that Spain was ready as early as next weekend to ask for international support, but Germany had signaled it should hold off. The Brazilian real and the Mexican peso were flat at 2.025 and 12.845 per dollar, respectively. The Chilean peso was little changed at 473.00 per greenback. "(Mexico's) currency is in the air and I believe it is going to be subject to speculation until the weekend due to uncertainty about a bailout request," said Jose Curiel, a trader with Intercam brokerage in Mexico City. Latin American FX prices at 1650 GMT: Currencies daily % YTD % change change Latest Brazil real 2.0250 0.02 -7.73 Mexico peso 12.8453 -0.04 8.75 Argentina peso* 6.2400 0.32 -24.20 Chile peso 473.0000 -0.08 9.79 Colombia peso 1,798.7000 0.08 7.77 Peru sol 2.5980 -0.08 3.81 * Argentine peso's rate between brokerages Tweet this Link this Share this Digg this Email Reprints Comments (0) Be the first to comment on reuters.com. Add yours using the box above.

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